PNG Oil Production

PNG Oil Production
A Continued Great Value Driver
PNG Mining & Petroleum Investment Conference
December 2012
O I L S EAR C H LI M ITE D
Safety Performance
Total Recordable Injury Frequency Rate of 3.20 in 1H12, unacceptable
Performance has improved significantly in 2H12
9
Australian Companies
(APPEA)
8
TRI / 1,000,000 Hours
7
6.0
6
5.2
5
International
Companies
(OGP)
4
3
2
1.75
Oil Search
1
0
2
1.96
1.68
1.85
1.76
1.16
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
O I L S EAR C H LI M ITE D
Australian Safety Benchmarking
Total Recordable Injury Frequency Rate Data for 2011
per Million Hours Worked (All Reported Data)
Wesfarmers
Qantas
CSR
OZ Minerals
Treasury Wine Est.
Brambles
Boart Longyear
Fletcher Building
Hastie Group
United Group
Monadelphous
James Hardie
Downer EDI
Incitec Pivot
Transfield
Origin
Contact Energy
Stockland
AGL Energy
BHP Billiton
Woodside
Amcor
Newcrest
Santos
AWE
PanAust
Caltex
Orica
Australian
Benchmarking
FY11
Dec YE
Oil Search
WorleyParsons
0
5
10
15
20
25
30
35
40
45
50
Source: Company data, Citi Investment Research and Analysis.
Note: TRIFR – Total Recordable Injury Frequency Rate per 1 million hours worked
3
O I L S E A R C H L I M I T E D3
Ensuring a Sustainable Future
Oil Search considers that ensuring a sustainable future for the Company and
the social and physical environment around our operations is paramount
Our PNG Oil Operations have been certified as compliant with ISO 14001
standard for environmental management since 2009 – We have recently
successfully passed our first recertification audit
We are currently finalising approval of a number of projects in the
European Carbon Emissions Reduction (CER) market – Carbon Credits
We are working closely with our host communities and the PNG Government
on ensuring equity and transparency in the community benefits distribution
processes
Oil Search continues to engage with project area communities to manage
potential environmental impacts and provide them with options for a
sustainable future
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O I L S EAR C H LI M ITE D
Our Production Environment
2
4
3
OWC ~2830mTVDCD
Remote, mountainous terrain
5
Unreliable seismic
Complex geology
O I L S EAR C H LI M ITE D
Oil Production Performance
6
Since assuming Operatorship in 2003 Oil Search has drilled 35 development
and near-field wells without a dry hole
This in turn has added greatly to; the wealth of PNG, the revenues of the
community, the growth of the Company and the value delivered to all Oil
Licencees
O I L S EAR C H LI M ITE D
Gas Conservation Performance
7
O I L S EAR C H LI M ITE D
How Has This Been Achieved?
Everyone focuses on the things that are most important to them
PNG Oil Production is very important to Oil Search – It is our sole source of
revenue and the engine that has fuelled the Company’s stellar growth over
the past ten years
From 2002 we focused on pulling together the best team of subsurface
engineers and geoscientists available – They have been the “architects” of
the success
This has been coupled with a great field production & maintenance team
and a world class drilling team – PNG is one of the world’s most challenging
environments in both these areas!
This great skill base combined with high levels of commitment and a lot of
plain hard work has made this outstanding achievement a reality
We expect PNG oil production to remain flat at ~30,000 Bbls/day until end
2014
8
8
O I L S EAR C H LI M ITE D
Hedinia 10 and Agogo 6
Complex and invisible - highly successful near-field exploration to date
Kutubu oil field
Agogo oil field
ST2
ST3
ST1
Sub-thrust
forelimb
Sub-thrust
forelimb
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O I L S E A R C H L I M I T E D9
2012/13 Development & Near-Field
Appraisal Drilling Activity
PPL260
PRL PDL9
02
Juha
6°S
Hides
Angore
PDL1
PRL
11
PDL
7
PDL8
PPL277
PRL
11
PDL6 PDL5
PDL7
PPL233
Mananda 5
Moran:
PPL219
PPL233
2012 : 1 well
2013 : 1 well, ± 1 workover
SE Mananda
Kutubu:
Agogo:
2012 : 1 well, 2 workovers
2013 : 1-2 wells
PDL2
2012 : 3 workovers
2013 : ± 1 well, 3 workovers
Gobe Main:
Usano:
Oil Field
2013 : ± 1-2 workovers
2012 : 1 workover
2013 : 1 well
PDL
4
Gas Field
2012 : 2 well interventions
2013 : ± 1-2 workovers
Oil Pipeline
PNG LNG
Gas Pipeline
7°S
Major Road
PDL PDL
4
3
Cobra
Iehi
PRL09
OSH Facility
PNG LNG
Project Facility
PRL
14
SE Gobe:
Prospect
PRL08
Barikewa
Kimu
40km
10
10
143°E
144°E
O I L S EA
RCH LIMITED
Production
Achieving Predictability in Production
Time
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O I L S EAR C H LI M ITE D
Key Components of the Forecast
Base Decline
New Opportunity
Initial Rate
Production
Production
Decline (%)
Time
Plateau
Time
Production Forecast
P50 Rates
P10 Rates
P90 Rates
Production
- Excel
- VBA
- @Risk©
Time
Increasing uncertainty
Production Deferrals
UMD allowance
Schedule
Well A
4
Well B
Well C
Well D
2
4
3
Production
Iteration 1
Well downtime for
incremental work
Planned facility downtime
Time
12
3
4
4
2
Iteration 2
Time
O I L S EAR C H LI M ITE D
UMD Events Allowance
UMD allowance distribution
1.20%
25
10.0%
5.63%
80.0%
10.0%
Forecast UMD Allowance:
MEAN = 3.3%
20
MODE or "most
likely" = 2.7%
15
P50 = 3.2%
10
Historical UMD events
year
∆ forecast
2004
2005
2006
2007
2008
2009
2010
2011
-2.5%
-6.5%
Pert(0,0.0265,0.092)
-9.2%
Minimum
-2.3% 0%
Maximum
9.20%
-1.4%3.30%
Mean
-2.8%2.65%
Mode
Median
0.0%3.15%
10%
1.20%
-1.5%5.63%
90%
Forecast UMD allowance
5
P10 = 1.2%
P90 = 5.6%
min
mean
max
0.0%
-3.3%
-9.2%
0
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O I L S EAR C H LI M ITE D
Results and Business Integration
Prior to probabilistic modelling, actual production was nearly 10% below
forecast for 3 consecutive years
Since implementing probabilistic modelling, the forecasting has been
significantly more accurate with actual production being within 4% for 3
years
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O I L S EAR C H LI M ITE D
Focus for the Future
World class safety performance is always at the top of the list
Delivering our work programme to keep production flat through to First Gas
is a key priority
The transitioning of our PNG production operations from an oil business to a
reliable gas producer is focus item for 2013 and beyond:
Separate team established to steward this process
Many agreements and protocols being developed with the PNG LNG
Project
Management systems and operating procedures being updated and
upgraded
Continue to pursue incremental barrels and near-field opportunities
Fine tuning the associated gas depletion strategy to ensure that liquid
production and total value is maximised through the long term
Ensuring we have the capacity within the PNG operations teams to support
the broader opportunities emerging for the Company – We want to export
Papua New Guinean expertise to the world!
15
15
O I L S EAR C H LI M ITE D
Oil Appraisal - Mananda 6
Mananda 6 appraisal well is located ~5km south east and ~140m up-dip from
the Mananda 5 discovery
Contingent upon the results of Mananda 6, a down dip side track could be
drilled to constrain fluid contacts
Contingent upon the results of Mananda 6 and any associated side tracks,
Mananda 7 could be drilled from the Mananda 6 well pad
Appraisal well, Mananda 6, planned to spud1Q13
Mananda 5
Mananda 6
Proposed Location
MORAN
2012
Seismic
SE MANANDA
5km
AGOGO
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O I L S E A R C H L I M I T E 16
D
Questions
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O I L S EAR C H LI M ITE D
Disclaimer
DISCLAIMER
While every effort is made to provide accurate and complete information, Oil Search Limited does
not warrant that the information in this presentation is free from errors or omissions or is suitable
for its intended use. Subject to any terms implied by law which cannot be excluded, Oil Search
Limited accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect)
incurred by you as a result of any error, omission or misrepresentation in information in this
presentation. All information in this presentation is subject to change without notice.
This presentation also contains forward-looking statements which are subject to particular risks
associated with the oil and gas industry. Oil Search Limited believes there are reasonable grounds
for the expectations on which the statements are based. However actual outcomes could differ
materially due to a range of factors including oil and gas prices, demand for oil, currency
fluctuations, drilling results, field performance, the timing of well work-overs and field
development, reserves depletion, progress on gas commercialisation and fiscal and other
government issues and approvals.
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O I L S EAR C H LI M ITE D